There is a high likelihood of a coalition government being formed after this year's federal general election, after a surge in support for the NDP.
Lower investment in the energy sector will lead to weaker average real GDP growth over the coming years, particularly in the absence of higher manufacturing activity.
The prospect of a technical recession and below-target inflation suggest that the Bank of Canada is not done with monetary easing. We see another 25bps interest rate cut to 0.50% this year.
Key Forecast Changes
No major forecast changes have been made this quarter.
Key Risks To Outlook
High household leverage and continued housing price growth could lead to a crash in the real estate sector and trigger a recession.
Negotiations with Iran could breakdown and sanctions remain in place, putting upside risks to our oil price outlook, which in turn could pave the way for higher investment in the energy sector and a stronger export performance.
|Real GDP growth, % y-o-y||2.0||2.5||1.5||1.8|
|Nominal GDP, USDbn||1,812.3||1,763.8||1,586.9||1,668.7|
|Consumer price inflation, % y-o-y, eop||1.2||1.5||1.6||2.0|
|Exchange rate CAD/USD, eop||1.06||1.16||1.28||1.25|
|Budget balance, % of GDP||-1.0||-0.7||-0.4||0.1|
|Current account balance, % of GDP||-3.0||-2.1||-1.6||-1.4|